PPC Growth Pains

I've been involved in the Online Advertising Industry for some time now, and I just have to vent a bit about this topic. Sorry in advance for the length-

The Online Advertising Industry is composed of several different groups. At one end are the Search Engines such as Google, Yahoo, and MSN, sitting back and rubbing their hands in glee as PPC and other ad revenues continue to show healthy growth. At the other end, you have an entire boatload of advertisers that are in the process of pulling healthy chunks of their budgets from more traditional media sources to Online Advertising, having heard about (and in many cases personally experienced) the successes that have been touted in various media. Somewhere in the middle is a group of vendors that sense an opportunity to provide services to a nascent Industry that has tremendous growth potential.

Sounds like a recipe for success, doesn’t it? A happy association of companies, all working together, in an industry that has been forecasted for almost straight line growth for the foreseeable future. I’m not here to say it’s not—but I will say that I have noticed some problems with this rosy scenario, starting with the almost dictatorial attitude that I perceive coming from the Search Engine side of this equation as it relates to one of the major issues facing this Industry. The issue is Click Fraud, and I’ll give you an example of what I’m talking about:

I live in the middle of this happy association, providing a Click Fraud detection software service to the industry. We have all seen the numbers bandied about in this area- it’s pretty much accepted that 20-25% of the clicks in a PPC Campaign appear to be fraudulent in nature. And there you have what you call your key phrase—“appear to be fraudulent.” Everybody in the happy association has a different idea of what this means, but the only opinion that really matters is that of the Search Engines themselves. As of now, these entities set their own policies and police themselves in this area- a situation that has the potential (if not the outright appearance) of a conflict of interest.

The Search Engines have worked hard to identify and restrict this problem before it actually gets to the invoice step of the online advertising process. Through their efforts, the rate of Click Fraud has dropped from the 40-50% we used to see, down to the average of 20-25% that is now accepted as the norm. However, it is pretty difficult to keep pace with the click fraudsters – theirs is also an “industry” that is evolving and changing at an ever-increasing rate. And from what I see, this effort is decidedly in the middle of the pack in terms of importance to the Search Engines. However, they certainly realize that it is in their best interest to have their advertisers’ campaigns succeed. Click Fraud is a menace to this success.

In my opinion, what would make the happy association even happier would be relatively simple to achieve. We need a standardized definition of Click Fraud, and even further, we need a standardized system that allows advertisers to report the problem, and ensures that the Search Engines are not refunding fees improperly. This system needs to have buy-in from all ends of the happy association, and it can start with a meeting of the minds that can set goals and expectations, and manage this change for the good of all concerned. There are some companies making efforts in this area- there is an organization called the Click Quality Council, whose stated mission is to “provide feedback and insight on issues relating to click quality that can be shared with the industry”. This is a great start, but we need to go further. We need this standardized system, and it needs to come from a credible source that has input from all areas of the industry.